Rwanda’s annual inflation rate accelerated to 3.68 per cent in June, up from 2.98 per cent in the previous month, reflecting the rise in the cost of food and non alcoholic beverages as well as education, according to the National Institute of Statistics of Rwanda.

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The body said, Wednesday, that the annual underlying inflation rate, which excludes fresh food and energy, eased to 3.51 per cent from 3.53 per cent. This was occasioned by the decrease in the cost of housing, water, electricity, gas and other fuels, and transport.

According to the statistics body prices of “local goods” rose faster than those of imported products, meaning Rwanda is experiencing less imported inflation compared to last year.

This could be explained by the relative stability of the Rwandan franc.

The general rise in the inflation rate is in line with forecast by economists following last month’s decision by the National Bank of Rwanda to slash the key repo rate by 50 basis points to seven per cent.

Economists had predicted the move would increase money in circulation thus stocking up inflationary pressures.

The decision aimed at boosting banks’ lending to the economy after figures showed that new authorised loans amounted to Rwf176.1 billion ($271.2 million) in the first five months of this year, down from Rwf214.4 billion ($329.7 million) in the same period last year.

Rwanda’s annual inflation rate is expected to rise up to 7.5 per cent by the end of 2013, with real economic growth rate dropping to 7.5 per cent from eight per cent last year, according to IMF and government forecasts.

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However, the World Bank’s forecasts suggest that the economy will grow by seven per cent in contrast to the IMF and government projections.